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Month: November 2018

Most blockchain companies have only been founded in recent months and are now in ICO preparations – not so Bitbond. The Berlin-based Bitcoin startup has been in existence since 2013 and even without ICO, the global loan brokerage business is on a growth course. Bitbond has a BaFin licence and can therefore fully operate a global credit business. The peer-to-peer lending network enables direct transaction processing between borrower and lender via Bitcoin. In particular, small entrepreneurs in emerging markets can take out loans without a regular bank account – completely in line with the higher-level Blockchain-Narrativ banking the unbanked. In a personal interview we asked CEO Radoslav Albrecht about all the recent developments at Bitbond and the future of Bitcoin:

What has happened with the Bitcoin evolution?

There have been two major changes: We received our BaFin license as Bitcoin evolution scam at the end of 2016 and as a result we were able to win institutional investors as lenders in the first quarter of 2017. This is a significant change, as it allows us to guarantee faster financing of loan requests. The financing of loans by the aforementioned institutional investors now accounts for 80 % of the total financing on Bitcoin evolution. In summary, it can be said that the cooperation with institutional investors has provided us with enormous growth since 2017.

The crypto markets are currently extremely volatile. How does the market environment and the Bitcoin course affect your business model?

There is no immediate impact as we only use Bitcoin for payment transfer. Bitcoins are only held for a very short period of time, so we can more or less eliminate the exchange rate risk. However, there is an indirect effect, namely the increase in transaction fees. This causes us problems, but is still limited. Nevertheless, we are looking for alternatives to use Bitcoin more efficiently in order to keep the costs manageable.

You are in possession of a BaFin license. Do you think the attitude of BaFin and other regulators towards crypto financial services has changed in recent years?

What do you think we can expect from BaFin in 2018?

One development is that BaFin is becoming increasingly professional and has acquired more knowledge. In the meantime, BaFin has several employees who deal with Blockchain and FinTech. I suspect that this will result in a shorter processing time for future licence applications from the blockchain area. Our license application then took three years. I think if we were at the same point today as 2013, we would only need one year. From what I hear, it is similar with other regulators that they are accumulating more knowledge and becoming more professional in dealing with blockchain companies. This was also demonstrated in the hearing before the US Congress, where there were very favourable voices regarding blockchain and crypt currencies. In 2018, we expect the BaFin to be more responsive to the needs of smaller and more agile companies, without making too many assumptions.

What is it that is currently causing you the most trouble? What are the biggest challenges for you?

Our most important goal is to grow, and accordingly, anything that slows down that goal is causing us to struggle. There are no serious problems, but it’s always a triad of fundraising to expand our capacity, fundraising on the debt side to finance more loans, and recruiting or finding the right people. These are normal operational processes. I see the future in a very positive light. I am pleased that more and more people are interested in the topic of crypto currencies and blockchain and that technologies in this area are developing and becoming more reliable. All in all, I think the industry is on the right track.

Ripple CEO Brad Garlinghouse has launched Ripples xRapid. The new system promises international payment services. The bank coin XRP plays a mediating role. However, the Ripple price is losing some of its strength.

On October 1st, Brad Garlinghouse, CEO of Ripple, announced the launch of xRapid. At the Swell Conference in San Francisco, the company also confirmed existing partnerships.

According to Ripple, xRapid will make cross-border transactions cheaper and faster in the future. XRP serves as a bridge between different currencies. When using the platform, currencies are first exchanged for XRP and then sent to the recipient. At the receiving party, XRP is exchanged back into the corresponding currency. Thus, the platform promises cost savings of up to 70 percent compared to conventional payment transfers.

Bitcoin evolution and Ripple Partners

CNBC reports that the product is currently used by three payment service providers. These are Mercury FX, Cuallix and Catalyst Corporate Federal Credit Union. Brad Garlinghouse told the news channel that he expects a Bitcoin evolution on the payment platform by the end of 2019. Dozens of banks dedicated to Ripple and Bitcoin evolution technology are expected to follow by the end of next year.

Attack on traditional payment system
Mercury FX and Cuallix are both payment service providers who already participated in the xRapid pilot phase of the project. Mercury FX plans to use xRapid for payment transfers between Europe and Mexico. Cuallix is also focusing on Mexico, but here it is payment services to the USA that the platform is designed to facilitate. The Catalyst Corporate Federal Credit Union also wants to use xRapid for cross-border payments. Brad Ganey, COO of Catalyst Corporate Federal Credit Union, explains:

“Traditional international payment processing does not meet today’s expectations in terms of price, speed and ease of use. The blockchain technology, and in particular Ripple’s xRapid product, solves all three challenges simultaneously. Catalyst Corporate will use the XRP digital assets through the technology platforms of our subsidiaries to immediately transfer money across borders on behalf of our more than 1,400 member cooperatives. We have signed a production contract and are currently expanding our plan.”

Ripple not unrivalled by Bitcoin evolution

The company around Brad Garlinghouse is not alone in its efforts to facilitate international payment transactions like in this review about the Bitcoin evolution (and to acquire them at the same time). With StellarX, the company currently has a promising Bitcoin evolution competitor dedicated to the same goal.

Ripple course shows little reaction
Surprisingly, the Ripple price did not continue to react to the announcement that the token would soon establish itself in the financial sector. At 0.56 US dollars, for example, the token lost almost four percent compared to the previous day. In the 7-day retrospect, however, it is still just under 25 percent plus. In the course of the month it looks even better. Here, the Ripple price has improved by a total of 65 percent.

In a recent interview with the Chinese newspaper Caixin Weekly, the head of the Peoples Bank of China (PBOC) gave further details on the bank’s own digital currency, Zhou Xiaochuan said in the interview that the bank is also considering possibilities that are not based on blockchain technology. The electronic payment network will use mobile payment methods, cloud computing, secure chip solutions and blockchain technology.

Xiaochuan said, however, that there is currently no clue as to what the final product will ultimately look like:

“We will work closely with the financial industry and research to explore all new technologies in detail. We want to find out which technology provides us with the best conditions for issuing a digital currency and what risks are involved for each individual”.

On 20th January the PBOC announced for the first time plans for its own digital currency, triggering great speculation about the exact appearance of the digital currency. Until now, digital currencies were largely associated with Bitcoin and the blockchain.

Xiaochuan pointed out that the blockchain still requires too many “resources” in terms of computing power and memory capacity. In addition, many banks are of the opinion that the blockchain cannot process enough transactions simultaneously.

“We have to wait and see whether the problem can be solved in the future. The banks have invested some resources in research on this issue,” says Xiaochuan.

Privacy of the digital currency

One issue where Bitcoin in particular was closely scrutinized with regard to the digital currency of the People’s Bank of China was privacy. According to Xiaochuan, this feature is very important for the planned digital currency.

Even though all Bitcoin transactions are publicly visible on the blockchain, the technology offers a certain amount of anonymity through the pseudonymous address system.

Nevertheless, the digital currency will use many different “information technologies”, including cryptographic algorithms to protect against counterfeiting.

The article in Caixin magazine also raised the question of a possible “51% attack” on the Bitcoin network, with a Miner network providing more than half of the hashing power and thus influencing and falsifying transactions.

Xiaochuan replied that a blockchain based digital currency would run on an authorized network, which is safe from external manipulation.

Schedule
During the interview, Caixin Magazine also asked about a timeframe and when the digital currency would eventually replace paper money.

Xiaochuan pointed out that there is currently no precise timetable and it is unlikely that the digital currency will completely replace paper money.

“It takes months for a small country to issue a new version of paper money. In the case of China, the same step has already taken 10 years.”

Xiaochuan expects that when the digital currency comes onto the market, the fees for paper money payments will rise continuously to motivate people to use the digital currency.